Cosmetics company L'Occitane en Provence must decide if it is the right time to go public, and, if so, where to list. The firm could list on Euronext in Paris, close to the firm's headquarters in southern France, on one of the large exchanges in the United States, or perhaps in Asia, where much of the firm's future growth is expected. The case provides opportunities to discuss the benefits and costs of going public, including valuation implications, and illustrates the choices faced by a prospective public firm that operates in a global setting.
Authors :: Bo Becker, Daniela Beyersdorfer, E. Scott Mayfield, Mayuka Yamazaki
Swot Analysis of "L'Occitane en Provence" written by Bo Becker, Daniela Beyersdorfer, E. Scott Mayfield, Mayuka Yamazaki includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that L'occitane Provence facing as an external strategic factors. Some of the topics covered in L'Occitane en Provence case study are - Strategic Management Strategies, IPO, Sales and Finance & Accounting.
Some of the macro environment factors that can be used to understand the L'Occitane en Provence casestudy better are - – central banks are concerned over increasing inflation, wage bills are increasing, increasing transportation and logistics costs, competitive advantages are harder to sustain because of technology dispersion, increasing government debt because of Covid-19 spendings, digital marketing is dominated by two big players Facebook and Google, talent flight as more people leaving formal jobs,
cloud computing is disrupting traditional business models, increasing inequality as vast percentage of new income is going to the top 1%, etc
Introduction to SWOT Analysis of L'Occitane en Provence
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in L'Occitane en Provence case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the L'occitane Provence, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which L'occitane Provence operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of L'Occitane en Provence can be done for the following purposes –
1. Strategic planning using facts provided in L'Occitane en Provence case study
2. Improving business portfolio management of L'occitane Provence
3. Assessing feasibility of the new initiative in Finance & Accounting field.
4. Making a Finance & Accounting topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of L'occitane Provence
Strengths L'Occitane en Provence | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of L'occitane Provence in L'Occitane en Provence Harvard Business Review case study are -
Effective Research and Development (R&D)
– L'occitane Provence has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study L'Occitane en Provence - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For L'occitane Provence digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. L'occitane Provence has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Ability to recruit top talent
– L'occitane Provence is one of the leading recruiters in the industry. Managers in the L'Occitane en Provence are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Training and development
– L'occitane Provence has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in L'Occitane en Provence Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Innovation driven organization
– L'occitane Provence is one of the most innovative firm in sector. Manager in L'Occitane en Provence Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Organizational Resilience of L'occitane Provence
– The covid-19 pandemic has put organizational resilience at the centre of everthing that L'occitane Provence does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Learning organization
- L'occitane Provence is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at L'occitane Provence is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in L'Occitane en Provence Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Superior customer experience
– The customer experience strategy of L'occitane Provence in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Sustainable margins compare to other players in Finance & Accounting industry
– L'Occitane en Provence firm has clearly differentiated products in the market place. This has enabled L'occitane Provence to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped L'occitane Provence to invest into research and development (R&D) and innovation.
High switching costs
– The high switching costs that L'occitane Provence has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Strong track record of project management
– L'occitane Provence is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Successful track record of launching new products
– L'occitane Provence has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. L'occitane Provence has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Weaknesses L'Occitane en Provence | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of L'Occitane en Provence are -
Products dominated business model
– Even though L'occitane Provence has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - L'Occitane en Provence should strive to include more intangible value offerings along with its core products and services.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the L'Occitane en Provence HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though L'occitane Provence has relatively successful track record of launching new products.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study L'Occitane en Provence, in the dynamic environment L'occitane Provence has struggled to respond to the nimble upstart competition. L'occitane Provence has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
No frontier risks strategy
– After analyzing the HBR case study L'Occitane en Provence, it seems that company is thinking about the frontier risks that can impact Finance & Accounting strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Lack of clear differentiation of L'occitane Provence products
– To increase the profitability and margins on the products, L'occitane Provence needs to provide more differentiated products than what it is currently offering in the marketplace.
Skills based hiring
– The stress on hiring functional specialists at L'occitane Provence has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Interest costs
– Compare to the competition, L'occitane Provence has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study L'Occitane en Provence, it seems that the employees of L'occitane Provence don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Aligning sales with marketing
– It come across in the case study L'Occitane en Provence that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case L'Occitane en Provence can leverage the sales team experience to cultivate customer relationships as L'occitane Provence is planning to shift buying processes online.
Slow to strategic competitive environment developments
– As L'Occitane en Provence HBR case study mentions - L'occitane Provence takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Increasing silos among functional specialists
– The organizational structure of L'occitane Provence is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. L'occitane Provence needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help L'occitane Provence to focus more on services rather than just following the product oriented approach.
Opportunities L'Occitane en Provence | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study L'Occitane en Provence are -
Developing new processes and practices
– L'occitane Provence can develop new processes and procedures in Finance & Accounting industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Using analytics as competitive advantage
– L'occitane Provence has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study L'Occitane en Provence - to build a competitive advantage using analytics. The analytics driven competitive advantage can help L'occitane Provence to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Better consumer reach
– The expansion of the 5G network will help L'occitane Provence to increase its market reach. L'occitane Provence will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Building a culture of innovation
– managers at L'occitane Provence can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Finance & Accounting segment.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects L'occitane Provence can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Loyalty marketing
– L'occitane Provence has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Manufacturing automation
– L'occitane Provence can use the latest technology developments to improve its manufacturing and designing process in Finance & Accounting segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Buying journey improvements
– L'occitane Provence can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. L'Occitane en Provence suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, L'occitane Provence can use these opportunities to build new business models that can help the communities that L'occitane Provence operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, L'occitane Provence can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, L'Occitane en Provence, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Finance & Accounting industry, but it has also influenced the consumer preferences. L'occitane Provence can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help L'occitane Provence to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Lowering marketing communication costs
– 5G expansion will open new opportunities for L'occitane Provence in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Finance & Accounting segment, and it will provide faster access to the consumers.
Threats L'Occitane en Provence External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study L'Occitane en Provence are -
Increasing wage structure of L'occitane Provence
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of L'occitane Provence.
Shortening product life cycle
– it is one of the major threat that L'occitane Provence is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
High dependence on third party suppliers
– L'occitane Provence high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, L'occitane Provence can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study L'Occitane en Provence .
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of L'occitane Provence.
Easy access to finance
– Easy access to finance in Finance & Accounting field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. L'occitane Provence can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for L'occitane Provence in the Finance & Accounting sector and impact the bottomline of the organization.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. L'occitane Provence needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study L'Occitane en Provence, L'occitane Provence may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Finance & Accounting .
Environmental challenges
– L'occitane Provence needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. L'occitane Provence can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
Technology acceleration in Forth Industrial Revolution
– L'occitane Provence has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, L'occitane Provence needs to keep up with the evolution of technology in the Finance & Accounting sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents L'occitane Provence with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Weighted SWOT Analysis of L'Occitane en Provence Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study L'Occitane en Provence needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study L'Occitane en Provence is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study L'Occitane en Provence is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of L'Occitane en Provence is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that L'occitane Provence needs to make to build a sustainable competitive advantage.
